Slowing medical cost inflation
There appears to be some good news on the medical cost front. Reports indicate that costs per patient in the Medicare Program continue to rise but at a much slower rate. What’s going on and why? N.C. State University economist Mike Walden responds.
“We do have this government data. And I might say we’re using the Medicare Program first of all because it gigantic; it’s where if you’re over 65 where most of the medical expenses occur. And also the government keeps a lot of data on Medicare.
“And what we’re seeing is that in terms of what the patient is paying say for a co-pay or deductible for hospital and doctor for services, a decade ago that was rising at about 10 percent a year per patient. Today it’s been rising between 1 and 2 percent; so a dramatically big decline in the inflation rate for these medical care costs.
“And a big question is why. Analysts who’ve looked at this say that first of all, it doesn’t appear that patients are actually using less medical care. So, it’s not because they’re buying less. Instead, they think improvement has come from two factors. One, we have low inflation across the board. Inflation right now is around 1 or 2 percent for virtually everything. And then secondly — and this is really, I think, key for medical care — it appears that doctors and hospitals are using more efficient treatment procedures and technology.
“That is, you’re getting more bang for their buck, and that has kept their cost down. So, this, indeed, is very, very good news for medical costs. We certainly hope that it continues.”Category: Economic Perspective